I tested very similar code on Windows and also on IBM z/OS mainframe, both are at SAS 9.1.3 Service Pack 4. The results are different -- Windows generates an EMAIL that is treated as text-format, not HTML, as you explained. I sent the same EMAIL from the IBM mainframe environment, and the EMAIL client read the content correctly, showing the HTML-rendered output.
So, I do not have time to test it, but there is a SAS HOTFIX (maintenance) Bundle that applies on top of SAS 9.1.3 SP4 (HOTFIX E9BC05 for Windows, incorporated into HOTFIX bundle E9BX03, dated Mar 2008), and I do see where several SMTP mail issues are addressed (link to SAS support site provided below). You may want to investigate the maintenance, or possibly contact SAS support for more specific guidance, possibly even a circumvention.
Scott Barry
SBBWorks, Inc.
ftp://ftp.sas.com/techsup/download/hotfix/e9_win_sbcs.html
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